Ecommerce

Matson, Inc. announces fourth quarter and full year 2021 results

e business

— Repurchased approximately 1.0 million and 2.5 million shares in 4Q21 and full year 2021, respectively

— 4Q21 EPS of $9.39

— Full Year 2021 EPS of $21.47

— Full Year 2021 Net Income and EBITDA of $927.4 million and $1,350.3 million, respectively

— Year-over-year increase in 4Q21 and consolidated operating income driven primarily by China service strength

Matson, Inc. (“Matson” or the “Company”) (NYSE: MATX), a leading U.S. carrier in the Pacific, today reported net income of $394.5 million, or $9.39 per diluted share, for the quarter ended December 31, 2021.  Net income for the quarter ended December 31, 2020 was $85.6 million, or $1.96 per diluted share.  Consolidated revenue for the fourth quarter 2021 was $1,267.0 million compared with $700.1 million for the fourth quarter 2020.

For the twelve months ended December 31, 2021, Matson reported net income of $927.4 million, or $21.47 per diluted share compared with $193.1 million, or $4.44 per diluted share in 2020.  Consolidated revenue for the twelve month period ended December 31, 2021 was $3,925.3 million, compared with $2,383.3 million in 2020.

“Matson finished off a strong year with continued improvement in economic and business trends in our markets driving solid performance in both Ocean Transportation and Logistics,” said Chairman and Chief Executive Officer Matt Cox.  “Within Ocean Transportation, our China service continued to see significant demand for its expedited ocean services as volume for e-commerce, garments and other goods remained elevated.  Continued strong demand for the China service was the primary driver of the increase in consolidated operating income year-over-year.  Supply chain congestion remains the current issue in the Transpacific tradelane due to ongoing elevated consumption trends, U.S. domestic supply chain constraints, and inventory restocking.  For 2022, we expect these conditions to remain largely in place through at least the October peak season and expect elevated demand for our China service for most of the year.”

Mr. Cox added, “In our domestic ocean tradelanes, we continued to see strong demand with higher year-over-year volumes, including the benefit of an extra week, compared to the largely pandemic-reduced volumes in the year ago period.  In Hawaii, we experienced elevated westbound freight demand as the state’s tourism and economy continued to rebound from the pandemic lows and the slowdown in tourism at the beginning of the quarter as a result of the state’s efforts to address the spread of the COVID-19 Delta variant.  In Logistics, operating income increased year-over-year compared to the operating income achieved in the year ago period as we continued to see elevated goods consumption, inventory restocking and favorable supply and demand fundamentals in our core markets.”

Fourth Quarter 2021 Discussion and Update on Business Conditions

Ocean Transportation:  The Company’s container volume in the Hawaii service in the fourth quarter 2021 was 10.4 percent higher year-over-year.  The increase was primarily due to (i) higher retail- and hospitality-related demand due to the continued rebound in tourism and the Hawaii economy and (ii) the benefit of an extra week, compared to the pandemic-reduced volume in the year ago period.  Volume in the fourth quarter 2020 was negatively impacted by the state’s COVID-19 mitigation efforts, including restrictions on tourism.  Tourism and the Hawaii economy continued to rebound in the fourth quarter 2021 despite a softening in airline passenger traffic early in the quarter due to the state’s efforts to address the spread of the COVID-19 Delta variant.  In the near-term, we are cautiously optimistic on further economic recovery in Hawaii primarily due to improvement in the unemployment rate and increasing tourism traffic, including international visitors later in the year, but incremental waves of COVID-19 variants present the possibility of further economic slowdowns.

In China, the Company’s container volume in the fourth quarter 2021 increased 32.7 percent year-over-year.  The increase was primarily due to volume from the China-California Express (“CCX”) service and the benefit of an extra week.  The total number of eastbound voyages in the China service, including the impact of an extra week, increased by nine year-over-year, of which eight were CCX voyages and one was a CLX voyage.  Volume demand in the quarter was driven by e-commerce, garments and other goods.  Matson continued to realize a significant rate premium over the Shanghai Containerized Freight Index in the fourth quarter 2021 and achieved average freight rates that were considerably higher than in the year ago period.  Supply chain congestion remains the current issue in the Transpacific tradelane due to ongoing elevated consumption trends, U.S. domestic supply chain constraints, and inventory restocking.  For 2022, we expect these conditions to remain largely in place through at least the October peak season and expect elevated demand for our China service for most of the year.

In Guam, the Company’s container volume in the fourth quarter 2021 increased 14.0 percent year-over-year primarily due to higher retail-related demand compared to the pandemic-reduced volume in the year ago period.  In the near-term, we are cautiously optimistic on further economic growth in Guam as tourism traffic improves as the year progresses.

In Alaska, the Company’s container volume for the fourth quarter 2021 increased 10.2 percent year-over-year primarily due to (i) the increase in volume from the Alaska-Asia Express (“AAX”), (ii) the benefit of an extra week, and (iii) higher southbound volume.  In the near-term, we expect improving economic trends in Alaska, but the recovery’s trajectory continues to remain uncertain.

The contribution in the fourth quarter 2021 from the Company’s SSAT joint venture investment was $21.3 million, or $10.4 million higher than the fourth quarter 2020.  The increase was primarily driven by higher other terminal revenue and higher revenue per lift.

Logistics:  In the fourth quarter 2021, operating income for the Company’s Logistics segment was $14.8 million, or $5.2 million higher compared to the level achieved in the fourth quarter 2020.  The increase was due primarily to higher contributions from supply chain management and transportation brokerage as a result of elevated goods consumption, inventory restocking and favorable supply and demand fundamentals in our core markets.

Results By Segment

Ocean Transportation — Three months ended December 31, 2021 compared with 2020


Three Months Ended December 31, 

(Dollars in millions)

2021

2020

Change

Ocean Transportation revenue

$

1,025.9

$

543.9

$

482.0

88.6

%

Operating costs and expenses

(565.2)

(435.8)

(129.4)

29.7

%

Operating income

$

460.7

$

108.1

$

352.6

326.2

%

Operating income margin

44.9

%

19.9

%

Volume (Forty-foot equivalent units (FEU), except for automobiles) (1)

Hawaii containers

41,500

37,600

3,900

10.4

%

Hawaii automobiles

10,600

12,200

(1,600)

(13.1)

%

Alaska containers

19,400

17,600

1,800

10.2

%

China containers

53,600

40,400

13,200

32.7

%

Guam containers

5,700

5,000

700

14.0

%

Other containers (2)

5,600

4,900

700

14.3

%

(1)

Approximate volumes included for the period are based on the voyage departure date, but revenue and operating income are adjusted
to reflect the percentage of revenue and operating income earned during the reporting period for voyages in transit at the end of each
reporting period.

(2)

Includes containers from services in various islands in Micronesia and the South Pacific, and Okinawa, Japan.

Ocean Transportation revenue increased $482.0 million, or 88.6 percent, during the three months ended December 31, 2021, compared with the three months ended December 31, 2020.  The increase was primarily due to higher revenue in China, higher fuel-related surcharge revenue, and higher revenue in Hawaii and Alaska.  The higher revenue in China was primarily due to considerably higher average freight rates and higher volume.  The higher revenue in Hawaii and Alaska was primarily the result of higher volume.

On a year-over-year FEU basis, Hawaii container volume increased 10.4 percent primarily due to (i) higher retail and hospitality-related demand due to the continued rebound in tourism and the Hawaii economy and (ii) the benefit of an extra week, compared to the volume in the year ago period, which was negatively impacted by the state’s COVID-19 mitigation efforts, including restrictions on tourism; Alaska volume increased 10.2 percent primarily due to the increase in volume from the AAX, the benefit of an extra week, and higher southbound volume; China volume was 32.7 percent higher primarily due to CCX volume and the benefit of an extra week; Guam volume was 14.0 percent higher primarily due to higher retail-related demand compared to the pandemic-reduced volume in the year ago period; and Other containers volume increased 14.3 percent primarily due to the addition of China-Auckland Express volume in the South Pacific.

Ocean Transportation operating income increased $352.6 million during the three months ended December 31, 2021, compared with the three months ended December 31, 2020.  The increase was primarily due to considerably higher average freight rates and higher volume in China, partially offset by higher operating costs and expenses primarily due to the CCX service and higher incremental costs associated with the CLX+ service.

The Company’s SSAT terminal joint venture investment contributed $21.3 million during the three months ended December 31, 2021, compared to a contribution of $10.9 million during the three months ended December 31, 2020.  The increase was primarily driven by higher other terminal revenue and higher revenue per lift.

Ocean Transportation — Year ended December 31, 2021 compared with 2020


Years Ended December 31, 

(Dollars in millions)

2021

2020

Change

Ocean Transportation revenue

$

3,132.8

$

1,853.9

$

1,278.9

69.0

%

Operating costs and expenses

(1,995.1)

(1,609.1)

(386.0)

24.0

%

Operating income

$

1,137.7

$

244.8

$

892.9

364.7

%

Operating income margin

36.3

%

13.2

%

Volume (Forty-foot equivalent units (FEU), except for automobiles) (1)

Hawaii containers

157,600

145,700

11,900

8.2

%

Hawaii automobiles

46,600

46,600

0.0

%

Alaska containers

78,200

72,600

5,600

7.7

%

China containers

184,800

118,900

65,900

55.4

%

Guam containers

21,900

18,900

3,000

15.9

%

Other containers (2)

20,200

17,500

2,700

15.4

%

(1)

Approximate volumes included for the period are based on the voyage departure date, but revenue and operating income are adjusted to reflect the
percentage of revenue and operating income earned during the reporting period for voyages in transit at the end of each reporting period.

(2)

Includes containers from services in various islands in Micronesia and the South Pacific, and Okinawa, Japan.

Ocean Transportation revenue increased $1,278.9 million, or 69.0 percent, during the year ended December 31, 2021, compared with the year ended December 31, 2020.  The increase was primarily due to higher revenue in China and Hawaii, higher fuel-related surcharge revenue, and higher revenue in Alaska.  The higher revenue in China was primarily due to considerably higher average freight rates and higher volume.  The higher revenue in Hawaii and Alaska was primarily the result of higher volume.

On a year-over-year FEU basis, Hawaii container volume increased 8.2 percent primarily due to (a) higher retail and hospitality-related demand due to the reopening of the Hawaii economy compared to the negatively impacted volume in the year ago period as a result of the pandemic and the state’s COVID-19 mitigation efforts and (b) the benefit of an extra week, partially offset by volume associated with the dry-docking of a competitor’s vessel in the second quarter of last year; Alaska volume increased by 7.7 percent due to (i) the increase in volume from the AAX, (ii) higher northbound volume primarily due to higher retail-related demand compared to the negatively impacted volume in the year ago period as a result of the pandemic and the state’s COVID-19 mitigation efforts, (iii) higher southbound volume, and (iv) the benefit of an extra week; China volume was 55.4 percent higher primarily due to (A) incremental volume from the CLX+ service, (B) the addition of volume from the CCX service, (C) higher volume on the CLX service as a result of increased capacity in the tradelane, and (D) the benefit of an extra week; Guam volume was 15.9 percent higher primarily due to higher retail-related demand compared to the negatively impacted volume in the year ago period as a result of the pandemic and the island’s COVID-19 mitigation measures; and Other container volume increased 15.4 percent primarily due to higher volume in Okinawa and the addition of China-Auckland Express volume in the South Pacific.

Ocean Transportation operating income increased $892.9 million during the year ended December 31, 2021, compared with the year ended December 31, 2020.  The increase was primarily due to considerably higher average freight rates and higher volume in China, partially offset by higher operating costs and expenses primarily due to the CLX+ and CCX services.

The Company’s SSAT terminal joint venture investment contributed $56.3 million during the year ended December 31, 2021, compared to a contribution of $26.3 million during the year ended December 31, 2020.  The increase was primarily driven by higher lift volume and higher other terminal revenue.

Logistics — Three months ended December 31, 2021 compared with 2020

Three Months Ended December 31, 

(Dollars in millions)

2021

2020

Change

Logistics revenue

$

241.1

$

156.2

$

84.9

54.4

%

Operating costs and expenses

(226.3)

(146.6)

(79.7)

54.4

%

Operating income

$

14.8

$

9.6

$

5.2

54.2

%

Operating income margin

6.1

%

6.1

%

Logistics revenue increased $84.9 million, or 54.4 percent, during the three months ended December 31, 2021, compared with the three months ended December 31, 2020.  The increase was primarily due to higher transportation brokerage and supply chain management revenue.

Logistics operating income increased $5.2 million, or 54.2 percent, for the three months ended December 31, 2021, compared with the three months ended December 31, 2020.  The increase was primarily due to higher contributions from supply chain management and transportation brokerage.

Logistics — Year ended December 31, 2021 compared with 2020

Years Ended December 31, 

(Dollars in millions)

2021

2020

Change

Logistics revenue

$

792.5

$

529.4

$

263.1

49.7

%

Operating costs and expenses

(742.7)

(493.9)

(248.8)

50.4

%

Operating income

$

49.8

$

35.5

$

14.3

40.3

%

Operating income margin

6.3

%

6.7

%

Logistics revenue increased $263.1 million, or 49.7 percent, during the year ended December 31, 2021, compared with the year ended December 31, 2020.  The increase was primarily due to higher transportation brokerage and supply chain management revenue.

Logistics operating income increased $14.3 million, or 40.3 percent, for the year ended December 31, 2021, compared with the year ended December 31, 2020.  The increase was due primarily to higher contributions from supply chain management, transportation brokerage and freight forwarding.

Liquidity, Cash Flows and Capital Allocation

Matson’s Cash and Cash Equivalents increased by $268.0 million from $14.4 million at December 31, 2020 to $282.4 million at December 31, 2021.  Matson generated net cash from operating activities of $984.1 million during the year ended December 31, 2021, compared to $429.8 million during the year ended December 31, 2020.  Capital expenditures totaled $325.3 million for the year ended December 31, 2021, compared with $192.3 million for the year ended December 31, 2020.  The increase in capital expenditures was primarily due to the lease termination payment of $95.8 million for Maunalei and the purchase of equipment to support our new China tradelane services.  Total debt decreased by $131.1 million during the year to $629.0 million as of December 31, 2021, of which $564.0 million was classified as long-term debt.  As of December 31, 2021 Matson had available borrowings under its revolving credit facility of $642.0 million and a leverage ratio per the amended debt agreements of approximately 0.5x.

During the fourth quarter and full year 2021, Matson repurchased approximately 1.0 million shares and 2.5 million shares for a total cost of $84.5 million and $200.1 million, respectively.  From January 3, 2022 through February 16, 2022, Matson repurchased an additional approximately 0.3 million shares for a total cost of $30.5 million.  On January 27, 2022 the Company announced an increase of three million shares in its existing share repurchase program.

As previously announced, Matson’s Board of Directors declared a cash dividend of $0.30 per share payable on March 3, 2022 to all shareholders of record as of the close of business on February 10, 2022.

Teleconference and Webcast

A conference call is scheduled on February 17, 2022 at 4:30 p.m. ET when Matt Cox, Chairman and Chief Executive Officer, and Joel Wine, Executive Vice President and Chief Financial Officer, will discuss Matson’s fourth quarter results.

Date of Conference Call:

Thursday, February 17, 2022

Scheduled Time:

4:30 p.m. ET / 1:30 p.m. PT / 11:30 a.m. HT

Participant Toll Free Dial-In #:

1-877-312-5524

International Dial-In #:

1-253-237-1144

The conference call will be broadcast live along with an additional slide presentation on the Company’s website at www.matson.com, under Investors.  A replay of the conference call will be available approximately two hours after the call through February 24, 2022 by dialing 1-855-859-2056 or 1-404-537-3406 and using the conference number 3023619.  The slides and audio webcast of the conference call will be archived for one full quarter on the Company’s website at www.matson.com, under Investors.

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